Research On The Impact Of Stock Price Fluctuation On Shareholders' Pledge Behavior

With the maturity of the capital market and the improvement of the financing methods of shareholders,equity pledge become more attractive to lenders and borrowers than other traditional financing methods.Therefore,increasing shareholders choose to use equity as pledge loans from financial institutions.However,since securities are more volatile than fixed assets in other markets,equity pledge will be more risky than other traditional financing methods,not only for shareholders,but also for financial institutions and investors in market.As the information asymmetry in capital market is increasingly prominent,equity pledge also has problems such as moral hazard.Therefore,this article intends to explore whether shareholders' pledges will make different choices based on fluctuations of stock price,whether pledges will be used to send positive signals to the market.This article will also dedicate to answer the question of which choice would shareholder pick when they faced with violent market fluctuations,such as pledging to stabilize the stock price,lifting the pledge,or breaking the contract of loan.This article will use an empirical analysis to provide references for investors,financial institutions,and regulators when they need to predict the behavior of shareholders and make decisions.At the same time,it also provides recommendations for listed companies to regulate shareholders' equity pledge and formulate sound risk-control plans.This article chooses the equity pledge behavior of shareholders as the research object,and explores the impact of stock price fluctuations on the pledge behavior of shareholders,which is mainly divided into five parts.Initially,based on the realistic background,this article raises questions about the choice of shareholder pledge behavior through the case of Tongjitang,explains the significance,and clarifies the research framework and content of the paper.Then,this article raises the problems found in the case to the general situation for research,and reviews the reference at home and abroad about the antecedents and consequences of shareholder pledge behavior,stock price volatility,and the impact mechanism of stock price volatility on shareholder pledge behavior,and point out the research directions and controversies that have not been studied at present.Next,based on the analysis of the theoretical mechanism,put forward the research hypothesis,and then construct the research model of empirical analysis and design the program of empirical analysis.In the empirical analysis part of this article,this article conducts the event analysis method and logistic regression on listed companies with equity pledge from 2016 to 2019,and classifies them according to the nature of the company's shareholders,the pledge method and the purpose of the pledge,researching the impact of stock price on shareholder pledges.The results found that: when the stock price fell,shareholders would tend to add new pledges,and the controlling shareholders would tend to supplement pledges;when shareholders expected that the stock prices of listed companies would drop in the future,the controlling shareholders would tend to lift pledges and the stronger the person's control power,the more inclined to supplement the pledge when the stock price drops;when the financing currency is used by the listed company or other third party,the pledger is more inclined to make new pledges when the stock price falls.Finally,this paper solves the problems raised in the opening chapter by analyzing the case of Tongjitang and applying the conclusions to the actual situation.Based on this result,this paper suggests that listed companies should improve their risk management control,and shareholders should strengthen the management and use of financing funds;financial institutions such as banks and securities companies should strengthen the risk prevention and management of equity pledge financing;regulatory authorities need to improve information disclosure and institutional restrictions on equity pledge financing of listed companies,strengthen investor risk management and education;investors should correctly interpret shareholder equity pledge and the information they may want to pass,and avoid blindly chasing gains and losses.The innovations are mainly reflected in the following aspects: First of all,the existing literature mostly studies the unilateral impact of pledges on the stock price from the perspective of external investors.But this article raises that shareholders,as internal investors,will also timing by stock price fluctuation.So it is an innovative direction to explore whether shareholders will consider the fluctuation of stock prices when they pledge equity.Additionally,past academic analysis of the reasons and purposes of equity pledge focuses on the company's internal governance and shareholders' private interests.While this article analyzes the mechanism of shareholder's pledge behavior affected by stock prices from the market perspective,thereby providing new logic of the factors influencing shareholder pledge behavior.Last but not least,this article makes a classification comparison based on the strength of shareholder control,so as to explore whether different nature of shareholders will affect respectively to their pledge equity behaviors.As China's capital market is becoming more and more mature,the research results of this article also provide references for investors' investment and research decisions,and also raise important ideas and directions for further exploring the signal transmission mechanism of China's securities market and the behavioral game among market entities.The research will lay the foundation for research on the advancement of the registration system and the combination of direct and indirect financing.